Download - OPEB 101 & Next Steps in Retirement Report
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OPEB 101 &Next Steps in Retirement Report
David S. T. Matkin, PhDAssistant Professor of Public Administration
Florida State University
Research Fellow, LeRoy Collins Institute
LeRoy Collins Institute Board Meeting
September 12th, 2012
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Overview
• Reports in Print/Press– Trouble Ahead: Florida Local Governments and Retirement
Obligations (February 2011)– Report Card: Florida Municipal Pension Plans (November 2011)– Years in the Making: Florida’s Under-Funded Municipal Pension
Plans (September 2012)
• Retirement Topics in Development– OPEB 101– Investment Returns– Benefit Levels
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OPEB 101
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OPEB 101 Outline
• What is it?– Retirement Obligations (Healthcare Insurance Subsidies)– New Accounting Standard (Nos. 43 & 45)– Implicit & Explicit Benefits
• Where do we stand?– Size of liabilities– Funding status– Size of annual contributions– Relationship to general debt
• What should be done? – Board Recommendations?
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Size of the OPEB Liability
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Size of the OPEB Liability
Franklin CountyHollywoodMiami PoliceSanford
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Size of the OPEB Liability
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Funding the OPEB Liability
• Fund the Liability
– Explicit Benefits (n=67)• Pay-as-you-go = 45• Prefund (Non-GAAP qualified) = 4• Prefund (GAAP qualified) = 18
– Percent Funded (median) = 12%
– Implicit Benefits (n=83)• Pay-as-you-go = 76• Prefund (Non-GAAP qualified) = 2• Prefund (GAAP qualified) = 5
– Percent Funded (median) = 30%
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Size of the Annual Required Contribution
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Size of the Annual Required Contribution
Miami PoliceFranklin County
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Size of the Annual Required Contribution
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Funding the ARC
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Relationship to Other Long-term Debts
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Relationship to Other Long-term Debt
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Previous OPEB Recommendations
Trouble Ahead Report:
1. Among other options, Florida lawmakers should give much consideration to repealing current Florida law requiring the implicit subsidization of healthcare benefits for Florida local governmental retirees.
2. State oversight by a relevant state agency should be provided in statute to manage local retiree health benefit obligations. This agency should establish standards and provide technical assistance, if desired, to local government staff and local officials.
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INVESTMENT RETURNS
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Actual Returns
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Allocation in Equities
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Actual Returns Over Time
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Actual Return - Return Assumption
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BENEFIT LEVELS
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Average Benefits Per Retiree
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Years of Benefits on Hand
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Years of Benefits on Hand
Funding Level Obs. Years on Hand
Less than 60% 46 10.3
60 to 70 % 81 13.3
70 to 80 % 73 14.9
80 to 90 % 65 16.8
Greater than 90% 61 20.8
Total 326 15.6
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Discussion and Questions